Japan's Yen Hits 40-Year Low as Inflation and Middle East Tensions Fuel Dollar Surge

The Japanese yen has hit a 40-year low against the US dollar as inflation and Middle East tensions drive up demand for safe-haven assets. The USD/JPY pair is trading near 163.90, with Japan's CPI rising to 1.7% in June.

The U.S. Treasury has called on the Bank of Japan to raise rates faster, while oil prices topping $100 a barrel have reignited inflation concerns and boosted the dollar. Middle East tensions are adding pressure, with President Trump threatening military action against Iran and the Houthis.

Analysts say that even direct currency intervention would only delay the problem, as the yen's weakness is likely to continue without faster rate hikes from the Bank of Japan.